OPEC reportedly reached compromise on oil production after dispute with UAE

DUBAI, United Arab Emirates – The Organization of the Petroleum Exporting Countries reached an agreement on Wednesday after a nearly two-week standoff over its future oil production levels, according to reports from the Wall Street Journal and Reuters.

The temporary but unprecedented blockage that began in early July saw the United Arab Emirates reject a coordinated oil production plan for the group led by its kingpin Saudi Arabia.

Abu Dhabi had demanded that its own “benchmark” for crude production – the maximum volume it is recognized by OPEC as capable of producing – be increased because that figure then determines the size of production cuts and quotas. which he must follow in accordance with the group’s exit agreements. Members reduced the same percentage of their baseline, so having a higher baseline would allow the UAE a larger production quota.

The UAE initially requested that its baseline be raised from 3.2 million barrels per day to 3.8 million barrels per day. According to sources cited by the Wall Street Journal, the compromise reached between Saudi Arabia and its small neighbor will raise the UAE’s benchmark to 3.65 million barrels per day from April 2022. Reports have not not officially confirmed, and OPEC and Saudi Arabia’s energy ministry did not respond to CNBC’s requests for comment.

The original deal backed by most OPEC delegates included a plan for the group to collectively raise production to 400,000 barrels of crude per day per month until the end of 2022. That would end the remaining limits set in spring 2020, as the economic recovery and growing demand for oil pushed crude prices to their highest level since late 2018.

Read the full Wall Street Journal report here.